A Compelling Human and Economic Case for Transforming How We Understand Consumer Vulnerability
In my role as Head of Data Solutions at TransUnion in the UK, I’m always looking to evolve our data coverage with partnerships, alternative data sources and powerful, new concepts that offer richer, more actionable consumer insights.
A key focus is improving how data points help us understand consumer vulnerability. TransUnion already has a well-earned reputation for developing and informing strategies related to pure ‘financial’ vulnerability, but which ‘unseen conditions’ can be classed as ‘non-financial’? Herein lies a big gap in understanding for different sectors and society as whole.
In light of the wider, current economic situation, the health of the nation post-COVID, and advancements in the regulatory framework, such as the Consumer Duty, this gap is one I feel we’re duty bound to help close. That’s why we’ve worked tirelessly to identify how we begin the journey of better understanding – and moreover, appropriately treating – these sensitive issues. After all, we’ve all heard anecdotally how a firm’s well-intended actions can lead to worse, subsequent outcomes for an individual due to lack of prior knowledge of an underlying vulnerability – and how to best respond to it. Clearly, understanding a consumer’s financial and non-financial well-being through robust, actionable data insights and transforming that knowledge into tailored, relevant actions takes work. But this is a goal I think we should all aim for.
Consumer vulnerability – how big is the challenge?
In the broad sense, vulnerability can include financial, fraud and health issues. For context, roughly 16M UK consumers live with some form of disability and for many, their greatest need is appropriate access to credit and efforts to ensure their inclusion*. This is just one example of a significant segment of the UK population that may currently be underserved, presenting a persuasive argument for the potential of financial and non-financial indicators to help drive better consumer and business interactions.
In 2023, we conducted a study into the concept (based on a sample of 10 million consumers from the TransUnion Consumer Database). To enhance our understanding, we included non-financial vulnerability data by partnering with non-profit organisation, the Vulnerability Registration Service (VRS). This service allows consumers to self-register issues like financial vulnerability, physical disabilities or addictions (including drugs and gambling). Information is appended to files with actions, such as requesting lenders decline them for credit or informing a provider that they need more support accessing products or services (circumstances in this scenario could include the sight or hearing impaired).
Some valuable insights that emerged from the study I’d like to share include:
- A third (31%) of UK adults have at least one indicator of financial vulnerability; specifically, 11% of UK adults are experiencing financial distress.
- A significant percentage of the UK population are financially resilient. This indicates growth opportunities, but – in the context of the current economic climate – reinforces the value of indicators that proactively help prevent future harm.
- The existence of a vulnerability or a distress indicator is not standalone evidence of active distress, nor is it a good reason to action a specific judgment on that person. What we need are data insights that help us better understand individual circumstances and inform the right type of outcome for the customer. This is what the FCA is demanding from the sector.
- Financial harm was evident with consumers being excluded from non-essential credit products, which suggests services are currently not designed or provided to consumers who want them. This is a data blind spot that’s stopping organisations from understanding customer needs. A tenet of the Consumer Duty is financial vulnerability should drive greater access to products and better outcomes. For a variety of sectors, this points to potential, sustainable growth opportunities.
How TransUnion is shaping the conversation around consumer vulnerability
So, how can vulnerability indicators enhance access to services or better support consumers at the right time and to find the ‘right’ type of outcome? Our early work clearly shows what a powerful, transformative opportunity vulnerability indicators hold in helping enhance access to services or better supporting consumers at the right time to achieve the ‘right’ type of outcome. Plus, socioeconomic conditions and regulatory updates make it a highly relevant intervention.
At TransUnion, our key business promise is making trust possible in modern commerce. We leverage big data analytics and insights to help ensure consumers are reliably represented in the marketplace so they and businesses can transact with confidence and achieve great things — what we call Information for Good®. Complementing our product roadmap, we’re strengthening partnerships with relevant organisations and, via a policy submission to the Department for Business and Trade’s (DBT) consultation on proposals to improve the economic regulation of water, energy and fixed telecoms sectors, looking to shape an enhanced data ecosystem that prioritises all stakeholders. Additionally, we’ve signed the 2025 Fintech Pledge that aims to drive 25 million actions to help improve people's financial resilience by 2025.
My colleagues and I will be taking a deeper dive into these topics at Credit Week – with a series of curated talks and panel discussions involving thought leaders in this space. We’ll provide insights on emerging and established datasets, and share learnings that can help organisations build vulnerability into their customer strategies – making a material difference in consumer lives and performance dashboards.
I invite industry professionals to learn more about how we’re tackling this key societal issue – and perhaps even explore how to get involved. I look forward to hearing your individual thoughts and challenges.
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